India’s passenger vehicle exports remained flat in 2017, plagued by issue of GST refund to automobile manufacturers which has touched Rs 2,000 crore since the implementation of the new tax regime.According to the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle (PV) exports from India stood at 7,38,894 units last year as against 7,38,137 units in 2016, a marginal growth of 0.1 per cent.”The system of GST refund is not functioning and having an impact on exports of passenger vehicles. In December, we had a meeting of five-six top exporters and what we found was that the pending refund amount is around Rs 2,000 crore,” SIAM Deputy Director General Sugato Sen said.
The issue has affected companies which export more from India than they sell in the domestic market, he added.”One particular company had around Rs 800 crore of pending GST refund,” Sen said, adding those companies which had substantial domestic sales could still afford to manage the blocking of capital.Under the GST regime, payments are made upfront and manufacturers claim input tax credit refund later.Such has been the impact of GST on PV export from India that as per SIAM data, after its implementation in July 2017, exports began to decline rapidly.
In the January-March 2017 period, exports stood at 1,82,473 units as against 1,62,103 units in the year-ago period, a growth of 12.56 per cent.Similarly, in April-June period it increased by 13.79 per cent to 1,80,669 units from 1,58,770 units in the same period a year ago.In July-September, exports declined by 12.87 per cent to 1,81,423 units as against 2,08,223 units in the same period previous year.Likewise, in October-December, PV exports stood at 1,94,329 units as against 2,09,041 units in the year-ago period, a decline of 7.04 per cent.
Automobile manufacturers such as Ford India and Volkswagen India had in November expressed concern over the challenges faced by companies related to GST refund.VW India had even stated that it could be forced to rethink on exports if the challenge was not resolved. Sen said one of the reasons for drop in exports of PVs from India was also due to major exporter like Hyundai turning focus on catering to the growing demand in domestic market.
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